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Dollar Index steadies above 100.50 as Fed hike odds fade

FXStreet noted the CME FedWatch tool shows July rate-hike odds at 14%, down from 25% last week, while DXY trades near 100.75 amid US-Iran tensions.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, DXY, traded near 100.75 in early European trading and held a modestly constructive tone above the 100-day simple moving average, according to FXStreet. The index steadied above the 100.50 area as traders weighed developments tied to the US-Iran conflict and their impact on safe-haven demand.

FXStreet said the US military completed its ninth consecutive night of strikes against Iran, targeting command centers, air defence sites, maritime assets, missile facilities, and communications networks. It also noted US President Donald Trump threatened to broaden the war unless Iran stopped attacking ships transiting the Strait of Hormuz, while Iran's Islamic Revolutionary Guard Corps said the waterway would not be safe for petrochemical products or 'single drop of oil and gas' transit while US actions continue.

On the rates front, FXStreet reported traders have largely scaled back expectations for a Federal Reserve hike this month after softer-than-expected US June consumer and producer inflation data. It cited the CME FedWatch tool showing a 14% probability for a Fed rate hike in July versus 25% implied a week earlier, a shift that could pressure the dollar even as Middle East risks offer near-term support.

Technically, FXStreet said the DXY’s momentum looks contained after recent consolidation, with the RSI at 51.38. It pointed to resistance near 101.05 and 101.60, with immediate support around 100.50 before the psychological 100.00 level, and structural support at the 100-day SMA near 99.60.

Latest closeDollar index 100.71 ▲0.2%

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